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CORPORATE
MEDICINE

cive, suggestions? when it sells its practice. How does the group shield itself from po-
Texas ardently tentially intrusive incentives to put profit above patient care? The
believes that management company’s opportunity for abuse abounds. It is up to
physicians li- the physician to decide whether the paramount concern for the pa-
censed to prac- tient will prevail over the rationalized intrusions on medical care.
tice medicine The rationalized intrusions into care focus on the cash flow vari-
should be ables, such as the volume of patient encounters, the rapidity of hos-
the only in- pital discharges, required referrals for ancillary money-making
dividuals diagnostics and the reduction in physician-patient coverage through
making pa- physician extenders that are lightly or mostly unsupervised.
tient care The studies of management company acquisitions are universally
decisions, disappointing in their conclusions. Specifically, there is insufficient
in concert reported data to reach an empirical conclusion. Anecdotal conclu-
with a well- sions of the impact of private equity ownership flow from logical
infor med, extensions of the business model underlying the investment model.
consenting The desire to increase revenue and decrease cost puts pressure on
patient, with- the physician to make medical decisions that align with the profit
out regard to motivations of the management company. Management company
profitability. Texas acquisitions are abundant, but there are post-acquisition measures
does not tolerate of impermissible physician control. Candidly, there are instances
non-physicians con- where non-physician control can be beneficial to patient care. Struc-
trolling a physician’s de- tured reliance on evidence-based medical protocols can reduce med-
termination of what is best ical errors. Group purchasing power can reduce costs. It also
for the patient. This intolerance remains to be seen, in this dawning age of artificial intelligence,
dates to turn of the twentieth cen- whether physician control of medical care will give way to newer
tury company-towns that employed a practice models that leverage the opportunity for earlier intervention
physician to treat the workers and their families or reduction in medical errors.
and to the days of ‘snake oil’ salesmen who promised We have local success stories of hospital system-based practice
many of the panaceas touted today by Cbd distributors. We call groups that practice the highest level of medical care and reward
this policy the Texas prohibition against the ‘corporate practice of physicians with appropriate levels of compensation. Similarly,
medicine’ or CPOM. Optum, a division of publicly traded United Healthcare Group,
Texas has a history of CPOM disputes in its legal lexicon. The owns and operates WellMed, a multi-specialty physician group pro-
current state of the law can be summarized as an issue of control. viding care to a large population of Medicare beneficiaries. On the
When the management company has ultimate control of the med- other hand, there is the on-going legal battle between a hospitalist
ical practice, CPOM is violated and two consequences can ensue; organization and a physician staffing contractor to the St. david’s
the contractual arrangement can be negated or the Texas Medical hospital system in Austin, where the physicians’ allegations of unfair
board may take disciplinary action. However, a violation of CPOM control over medical decision making are yet to be decided.
does not entitle a physician to sue the management company for Ultimately it will be the resolve of Texas physicians who sell their
money. In legal jargon, there is no private cause of action for the practices or who go to work for management company-controlled
physician or the physician group to pursue. The two solutions avail- employers to appropriately push back on the profit motive of man-
able are to abrogate the original contractual arrangement or to seek agement companies to preserve the acknowledged priority in Texas
the TMb’s investigation. These are cumbersome, ill-suited dispute medical care – patients come first, before profit.
resolution paths that may linger years in the courts before the out-
come is known. Mike Kreager is a senior member of Kreager Mitchell PLLC, a law firm
Thus, it becomes an issue for the physician group to consider dedicated to the unique legal matters confronted by physicians.

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